The CPF contributions that have to be paid by both employers and their employees are usually calculated on the ordinary wages that employees have rightfully earned according to the terms of their employment. In the event of employees who are paid on a monthly basis, it implies that their respective ordinary wages that are either granted or due fully as well as exclusively with regard to employment in that particular month and is to be paid prior to the date it that is set for payment of contributions for the specific month. Ordinary wages for any given month may essentially comprise of commissions, piecework bonuses or allowances as well as overtime pay that were rightfully earned for that particular month and are set to be paid as one with the monthly basic wages of the employees. This means that the employee will receive both his basic monthly wage and his ordinary wages together as lump sum.
In cases whereby employees get their wages at certain intervals that do not exceed a time frame of a month, the total wage amount that is due to them is paid on the specific days that are designated for payment that occur in any given month. Such payment is usually considered as wages for the particular month regardless of whether a portion of the wages is the payment that is owed for the past month or not. The portion of the employees’ wages that is paid with regard to such an employment arrangement is also considered as ordinary wages for the particular month on which the day that is designated for the payment for these kinds of wages lies.
Both employers and their respective employees may decide to make all their CPF contributions solely on the basis of extra wages that the employee rightfully earns according to their particular terms of employment. However, contributions of this nature have to be thoroughly subjected to specific capping rules that have been put in place for this particular purpose. Capping rules help in maintaining sanity in such kinds of arrangements or provisions. It is also important to note and understand that all wage supplements and bonuses that are paid on annual basis as well as other payments of this kind that have payment intervals that exceed a month are considered as additional wages for that particular month in which they were paid. It is equally important to know that there should not be any attempts made to try to distribute such payments in a retrospective manner over any prior period as it is not allowed. Additional wages in Singapore should only be handled as explained above.
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